Earnings Preview: JCPenney and Best Buy Are Survivors

NEW YORK (TheStreet) -- Today's pre-earnings buy-and-trade profiles include five companies that report after the closing bell today and four that report before the opening bell on Thursday.

A detailed technical analysis chart about these stocks is on page 3 of this article. I also explain my number-crunching terms there.

Mall anchor JCPenney (JCP) will be tested after the close today as analysts expect the company to report an earnings-per-share loss of 79 cents. The stock set an all-time low at $4.90 on Feb. 5, so not closing below $5.00 a share is extremely important. That way investors buying the stock on margin will have to pony up a full purchase amount or sell their holdings. (Most brokerages won't allow individual investors to own a stock trading below five bucks a share on margin.)

Another turnaround story is Best Buy (BBY), which was a huge winner in 2013. It traded up from a multiyear low at $11.23 on Dec. 28, 2012, to a multiyear high at $44.66 on Nov. 13. Things haven't been so kind to the company in 2014, as the stock plunged below its 200-day simple moving average at $33.71 on Jan. 16 on weak guidance for 2013 holiday sales. The stock traded as low as $22.50 on Feb. 3.


On to the analysis.

Autodesk (ADSK) ($54.66, up 8.6% YTD): Analysts expect the software company for architectural design to report earnings of 21 cents a share after the closing bell today. The stock set an all-time intraday high at $55.98 on Monday, Feb. 24, well above its 200-day simple moving average at $41.83. The weekly chart is positive but overbought, with its five-week modified moving average at $52.49.

The stock has a gain of 49.3% over the last 12 months. Quarterly and semiannual value levels are $50.34, $50.24 and $49.35 with a weekly risky level at $55.41.

Best Buy ($25.31, down 36.5% YTD): Analysts expect the retailer of consumer electronic products and appliances to report earnings of $1.01 a share premarket on Thursday, Feb. 27. The stock set a 2014 low at $22.15 on Jan. 31 and is well below its 200-day SMA at $33.71. The weekly chart is negative but oversold, with its five-week MMA at $28.59.

The stock has a gain of 48.9% over the last 12 months. My semiannual value levels are $24.82 and $18.95, with quarterly and monthly risky levels at $30.06 and $39.39.

JCPenney ($5.63, down 38.5% YTD): Analysts expect the mall anchor retailer to report a loss of 79 cents a share after the closing bell today. The stock set a multiyear intraday low at $4.90 on Feb. 4, well below its 200-day SMA at $11.55. The weekly chart is negative but oversold, with the five-week MMA at $6.59.

The stock has a loss of 73.8% over the last 12 months. My annual value level is $5.10 with a semiannual risky level at $18.25.

Kohls (KSS) ($53.21, down 6.2% YTD): Analysts expect this general retailer to report earnings of $1.53 a share premarket on Thursday, Feb. 27. The stock has been trading back and forth around its 200-week SMA at $50.68 since mid-2009, and closed Tuesday above its 200-day SMA at $52.91 for the first time since Jan. 22. The weekly chart is positive, with its five-week MMA at $52.48.

The stock has a gain of 16.9% over the last 12 months. My semiannual value level is $46.89, with a quarterly pivot at $51.01 and annual risky levels at $52.25 and $54.63.

Lamar Advertising (LAMR) ($50.25, down 3.8% YTD): Analysts expect the outdoor advertising company to report earnings of 15 cents a share premarket on Thursday, Feb. 27. The stock set a multiyear intraday high at $52.33 on Dec. 31, then held its 200-day SMA at $46.98 on Jan. 31. The weekly chart is positive, with its five-week MMA at $50.12.

The stock has a gain of 16.6% over the last 12 months. Monthly and semiannual value levels are $46.84 and $43.24, with semiannual and quarterly risky levels at $54.35 and $57.01.

L Brands (LB) ($54.39, down 10.4% YTD): Analysts expect the specialty retailer of women's apparel and beauty products to earn $1.61 a share after the closing bell today. The stock set an all-time intraday high at $65.94 on Dec. 2, then traded as low as $49.87 on Feb. 3, and has been below its 200-day SMA at $55.98 since Jan. 16. The weekly chart shifts to positive, given a weekly close above its five-week MMA at $54.85.

The stock has a gain of 26.9% over the last 12 months. Weekly and monthly value levels are $49.39 and $44.61.

Transocean (RIG) ($43.42 down 12.1% YTD): Analysts expect the offshore contract drilling services provider to report earnings of 72 cents a share after the closing bell today. The stock set a 2014 low at $41.44 on Feb. 5 well below its 200-day SMA at $48.04. The weekly chart is negative but oversold, with its five-week MMA at $44.87.

The stock has a loss of 15.3% over the last 12 months. Monthly and weekly value levels are $42.70 and $40.73 with a quarterly risky level at $57.66.

Tivo (TIVO) ($13.17 up 0.4% YTD): Analysts expect the DVR set-top box company for TV recording to report earnings of 4 cents a share after the closing bell today. The stock has been trading back and forth around its 200-day SMA at $12.27. The weekly chart is positive with its five-week MMA at $12.64.

The stock has a gain of 7.6% over the last 12 months. Annual and monthly value levels are $11.67 and $11.55, with annual and quarterly risky levels at $14.20 and $14.39.

Wendy's (WEN) ($10.15 up 16.4% YTD): Analysts expect the hamburger chain to report earnings of 10 cents a share in the premarket on Thursday, Feb. 27. The stock set a new multiyear intraday high at $10.19 on Tuesday, with its 200-day SMA at $7.86. The weekly chart is positive but overbought, with its five-week MMA at $9.15.

The stock has a gain of 86.2% over the last 12 months. Quarterly and semiannual value levels are $7.17 and $6.80, with a weekly pivot at $9.56 and monthly risky level at $10.30.

Today's crunching-the-numbers table presents my detailed buy-and-trade profiles for the nine companies set to report quarterly results after the closing bell today or before the opening bell on Thursday, Feb. 27.

Crunching the Numbers with Richard Suttmeier

In the column labeled Last 12-Month Return I show the percent gain or loss over the last 12 months.

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: (stocks below a moving average listed in red are below that moving average)

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (Even Apple declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

More from Opinion

Why a Global Stock Market Crash Is Coming

Why a Global Stock Market Crash Is Coming

3 New Investing Myths That Must Be Busted

3 New Investing Myths That Must Be Busted

Sears CEO Eddie Lampert Looks Like He Is Sucking Company Dry

Sears CEO Eddie Lampert Looks Like He Is Sucking Company Dry

Nasdaq Exec: Exchange Is 'All-In' on Using Blockchain Technology

Nasdaq Exec: Exchange Is 'All-In' on Using Blockchain Technology

It's Dumb to Think Legalizing Weed Is Still a Political Issue

It's Dumb to Think Legalizing Weed Is Still a Political Issue